High Time Indian Software Companies adapted an ‘Indian MSME Framework’ !

In this lock down period, there are quite a few thinkers talking loud about the problems faced by Indian MSMEs (Medium Small and Micro Enterprise). Indian MSMEs, specially the non-IT companies are a major employment provider for maximum of the working population, skilled, semi-skilled or otherwise. They are suffering the maximum hit and will continue to do so. On the other hand, companies in software sector, irrespective of the size or turnover, are facing the heat due to the broken global economies and apprehensions thereof. These two sectors, MSMEs and Software, can be the brothers in arms who never really thought of working together in the past. This article talks about how MSMEs can leverage inherent benefits of software like tailor-made ERP (Enterprise Resource Planning), LIMS (Laboratory Information Management System) to gain competitive advantage in the new world.

MSMEs in the Corona time

It is indeed now fashionable to denote everything with the name of this virus. But that would be like ignoring the actual ills affecting the performance of MSMEs. The virus and pandemic have only accelerated the fall which would have taken 2-3 years more otherwise. What were those ills? If you talk about an MSME owner facing global competition, you can talk about high product cost, regulations, delays in process etc. While European and other companies from developed economies banked on high-precision, high-technology driven workforce to get the superior quality of outcome, China on the other hand banked on low product cost and comparatively cheap labour. On one hand developed economies delivered high quality to attract customers Chinese focussed on the cost advantage. If you take these two as two distinct thresholds of competitiveness, where do Indian MSMEs stand? Ostensibly, somewhere in between.

High Quality or Low Cost?

This has been the concern of MSMEs in this scenario before Corona arrived. While they have all the intention of being competitive – skill wise, quality wise, turn-around wise, the production cost brought forth by skill improvemt, process improvement, quality improvement takes away the cost advantage compared to Chinese. Add the time and cost taken away by regulatory paradigm and you realize that the MSMEs being pulled even lower in competitiveness index.

Should Quality take a hit to stay competitive?

Although it is never accepted openly and never done very willingly, many of the Indian buyers prefer chinese produce for low cost even though it is known that there are chances that it might not be of expected quality standards. Still it gets preference in Indian market. Does it mean Indian MSMEs now should lower quality standards to stay competitive? Does it mean MSMEs should let go of quality checks to cut corners? Does it mean MSMEs should use low quality materialls to save on poroduct cost? Some of them are inclined or feel pressurized to fall prey to these malpractices. However, it is not the solution to the problem.

Regulatory paradigm: boon or bane?

Lot has been said about this and lots of Government schemes keep talking about ‘ease of business’, but it is still not favorable for MSMEs. The entanglement of laws, paperwork, arduous follow up with officials, reporting mechanisms, ever changing amendments and illicit back channel payments are only some highlights of the entire gamut. Although the laws were enshirined to protect business interests, bring transparency and provide level playing field, they are having counter effect. The long delays, complexities and wranglings take away the time and money to fullfill these requirements and demotivates the MSMEs to take bigger leaps. This has been so infamous the world over that it has created a long-lasting perception that is detrimental to MSMEs and overall MSME sector.

Existing Software Paradigm

Continuing with the arguments in last sections, it sounds but natural to assume that the investors planning to move away from China will prefer Indian companies. Is it that obvious? Rather, it is opposite. Companies moving away from China are not making a beeline on Indian MSME doors and are going to Thailand, Indonesia, among others. Any technolgy orinted person would rightly assume that these MSMEs should implement enterprise wide software such as ERPs and LIMS to streamline business and increase profits. They would bring in office automation tools and Robotic Process Automation to replace repeated tasks with BOTs. They would move away from paper based and excel based reporting and bring in data visualization and BI tools such as Power BI and Tableau. We see even the corner shop owners using software to scan products, quickly generate bills and process payments. The software seems to be an integral part of the shop. So, goes for the doctors using apps to track patient appointments and accept payments. Then why MSMEs should not go for such solutions for their enterprise? Well they have the reason to be apprehensive.

Large-scale ERPs and LIMS bring irrelevant features

Although large scale enterprise software provides the required minimum features, it comes at a huge cost and brings in loads of features that are irrelevant from an individual MSME’s perspective. There is not much scope for customizing the software exactly as per MSME’s requirements. In turn MSMEs are bound to pay the high cost for features they never intend to use. As a result, the MSMEs stay away from these largescale ERPs. 

Our ‘American Model’ of Business Process Re-engineering

We all know and we have been told many times as to how the brightest Indian students/professionals landed in the US and other developed countries, worked for software biggies there and started the process of business process reengineering(BPR) or business process modeling(BPM). This story, with all due respect, is well known and of very less relevance when it comes to developing software for Indian MSMEs. The revenue model is different, the business processes are different, the regulatory environment is different and of course the customer mindset is different. Although most of the MSMEs think of going for software implementation, they face this hurdle due to this American Model adapted by software providers. When these software providers meet Indian enterprenuers and understand the difference, they are seldom motivated to work as per the right-sized customer requirements because their earning calculation based on American Models do not work and they realize the need of spending a lot of time at customer end to get the real business needs on paper. This is where the software vendors start losing interest and patience. Either, the development is left incomplete because of the lack of patience and motivation on software provider’s part or a situation of dispute between owner and software provider.

Software is not a magic wand! It addresses only ‘a set of’ requirements

Although I may be sounding critical of software providers all along, even business owners at MSMEs are often at fault when it comes to sharing business requirements. Aspirations are different than needs, dreams are different than plans and what you expect the software to do for you and what it can really do for you may be two different things altogether. Also, even if you want the software to behave just like some other software that impressed you, it may not turn out the way you expect. Just like your tailor needs to do some customization for the ready-made shirt you bought in a mall, it is the same case with software too. The only difference is that the customizations you expect may be within the scope of the product you are buying, or they might need a significant development effort by the software provider. Rather than spending that money, you would rather spend on developing a new solution tailor made to your needs. When it comes to buying and implementing software at your end, you need to really know your rational requirements that can be fulfilled by software provider. If you are not able to communicate your requirements clearly and if your vendor is not able to say ‘no’ to your unrealistic requirements with reasonable justifaction, you may end up with a failed implementation where you would blame the software vendor for not delivering according to your requirements and that the software vendor did not fully understand your domain as well as peculiarities of your business. The software vendor may have his reasons as to why the software could not deliver giving reasons like you kept changing requirements, there was a technology change which needed more investment in terms of skills and underlying software, the time was too short and the requirements were not communicated properly. Even if they are disputing, they would agree that they were not frequently being approached by the other side for concerns, clarifications, changes, and feedbacks. In fact, many of the software implementation at MSMEs have failed with one of the reaons mentioned above. All in all, it points to the fact that the owner and software vendor were never really on the same page. That activity of bringing these two parties on page is seldom given its due importance although it is critical for project’s success.

One software can never really address everyone’s requirement

The software vendors will come back in this situation with argument that it is impossible to address everyone’s expectations and every software has its own limitations in terms of scale, design, user experience, performance, and compatibility. Another argument in this regard is that a software can go only to a certain extent if customer wants his customizations delivered, and if customer does not relent, it is either the failure of customer to convey his expectations or failure on software vendor’s part to map customer’s requirements with product features. Two approaches can come handy in this scenario. A software vendor develops sector specific or sub sector specific features that are applicable to potential customer’s ecosystem. The eco system in this context may include business processes, data reporting requirements, local laws, among others. Another approach can be to take help of business analysts who will work with customers to understand the enterprise requirements and map those requirements with the software vendor’s solutions. Such excercises are taken up by freelance business analysts or enterprise analysts in developed economies where such analysts help in right sizing the requirements and bringing both parties on the same page. The analysts spend significant amount of time at customer location with a focus to document processes, discover data points, identify the scope of automation, and discover performance areas that can be optimized through a specific software solution. They also conduct POC (Proof of Concept) studies in some cases. Although such exercises can take time, they seem to prepare the enterprises in sharing requirements and on the otherhand, they make it easy for software vendors to understand the requirement clearly. It ensures that the interests of entrepreneurs and software vendors are protected and the chances for successful implementation go up significantly. This is not very frequently observed in case of Indian software vendors when they implement solutions for Indian MSMEs.

The functionality losses of switching between two software vendors

Many a times it also happens that MSMEs keep using the software implemented by a vendor and then make up their mind to migrate to another software by totally a different vendor. This might be a result of changes in top decision-making positions, aggressive marketing by a competitor or any other reason. The fact of the matter is that when you decide to switch vendors, there is always a chance that new software may not have all the features of your existing software. As a result of using a software over a considerable amount of time, you get used to certain features, although not critical, as a must have features from a new vendor. Besides, every software has a distinct user experience including the navigation, user controls and look – n – feel. The other vendor may not be able to match it to the ‘T’, yet it does not mean it lacks in functionality. As these cosmetic aspects also start playing role in new software selection, the software vendors need to convey this difference to their potential customers. They face issues in convincing about the difference between must have feature and nice to have feature. Even at this juncture, the software vendors can team up with business analysts, user experience consultants or solution architects as a bridge between them and entrepreneurs.

Establishing an eco system for MSME software development

If you have followed the arguments until now, you will see that MSME entities and software companies do have a reason to work closely with each other to de-risk their businesses in the global environment which seems to rethink about the supply chains. After the start of globalization, the supply chains spread the world over and the profitability was the only benchmark in choosing suppliers from faraway places. With such pandemics and social distancing, companies are rethinking their strategies to bring in some ‘localization’ back to avoid supply chain breakdown. Big software entities can start helping out MSMEs in automation and process optimization. In the long term this new ecosystem will ensure continuation of business and competitiveness.

Agile for MSMEs

Although the Agile development methodology is in use for software development projects the world over, many of the practices and principles are applicable to MSME projects as well. The concepts of continuous delivery, minimum viable product, story sizing, mockup creation, defect prioritization, system-based project tracking, frequent updates, biweekly delivery, continuous feedback and restrospective meetings can help software vendor build more trust with the customers. Although entire gamut of Agile activities may not be relevant, the principles will go a long way in ensuring proper communication channel between the two parties.

Solutionizing for sub-sectors and core processes

Although large ERP and LIMS vendors have shown the way in developing process specific solution, the software vendors when developing solutions for MSMEs will have to build unified solutions for key business processes and reporting as well as regulatory requirements of that subsector. The software companies will need to spend significant time and effort in studying the requirements initially, but this exercise will go a long way in gauging the pulse of the customers. This may require software companies to rework the modules to suit sector’s requirements and processes.

Right mix of data acquisition, data processing and advanced analytics solutions

There is no dearth of data acquistion, processing and advanced analytics as well as visualization and reporting BI solutions in the market. While data acquition space is largely owned by enterprise ERPs- big or miniature – as they bring process data from machines/shop floors and present it to business users in human-friendly format. This important real business logic development and therefore take up high cost for development. On the other hand, however, the data processing, visualization, reporting space is now captured by large enterprizes like Microsoft and Salesforce.
Microsoft is on its way to ultimate integration between server systems, virtualization and reporting and BI solutions. Its Power BI solution is compatible with Servers, easy to adapt for data modelling as well as pre-processing requirements and can provide MSME favorite formats like MS Word, Powerpoint and PDF. Indian MSMEs seem to be on their radar for a long time (may be due to Indian-origin CEO at the helm!). They seem to gun for MSME sector as they have really made it easy to convert excel experts to Power BI and have kept the prices quite low. The basic Power BI Desktop is offered free for lifetime. This is a good bet for high-technology customers with needs of stricter integration with Microsoft Servers. The other contender like Tableau is also bought out by SalesForce. This clearly seems to show a new integration solution being offered to CRM customers. Tableau is comparitively more attractive, more user friendly and with better data visualization capabilities. Although it is pricy it is good for low-tech requirements and lighter ETL requirements. 

Conclusion

Clearly there is a trend of integration between data acquisition systems and data post-processing systems. The data acquisition systems are high on development and can only be customized by specific developers. While the data post-processing solutions are now being made business user friendly and compatible with data acquisition systems and data bases. The move is clearly to increase adaption by business users. MSMEs now have more options to choose what fits their requirements.

Although our discussion started with the context of Corona, lock-down, broken supply chains, we know that large enterprises have already started on the integration of data value chain from source system to reporting. They are even making it easy for trial and error with extended trial periods and public access features. Where are the Indian services companies, Indian product companies in this field and what they are doing in this scenario? Are they finally going to look beyond the american shores and start engaging with MSME sector? Obviously the revenue would not be as high, but with global supply chains broken, it would make sense to start evaluating opportunities of engaging with MSMEs. This would need a separate eco-system and business approach as discussed. But this is the right time to get started with that Indian MSME model for software development.